Retirement planning is all about managing risk, right?
One of the biggest risks is sequence risk, which is the risk that market declines will happen at the beginning of retirement when withdrawals from a nest egg are needed to sustain income.
Early market declines can have a massive impact on the sustainability of a nest egg, particularly if they are paired with rising inflation.
Hmmm…..rising inflation? Isn’t it what the newspaper headlines have been screaming lately?
Even if you don’t agree if we’re in the mix of an inflationary period, your clients are reading those headlines.
Herein lies an opportunity to serve clients better.
Could it be good timing to illustrate sequence risk analysis with your clients?
It is if you use StratiFi because you can generate it in under 5 minutes!
It shows best and worst outcomes so your clients have a better understanding of the sequence of returns.
I pulled screenshots of a high-risk portfolio so you can see how the charts appear. It compares the current portfolio with the suggested portfolio.
It shows that both portfolios have nearly the same outcome in the lucky scenario where there is a bull market followed by a bear market.
However, in the unlucky scenario where there is a bear market followed by a bull market, the high-risk portfolio suffers losses that deplete the portfolio to a level that cannot support client withdrawal needs resulting in financial ruin.